Financials of a company can be pretty misleading -- especially post-recession. With business models focusing on the long term, I think it's fairly myopic to cast off companies whose short-term results look uninspiring. Keeping that in mind, let's see how Penn West (NYSE: PWE) has fared and how it has improved its operations in 2010.

The advantages
In a prior article, I spoke about Penn West's strong asset base with a diversified portfolio being one of the strong points. This is exactly what will prop up the company in years to come -- even amid so much volatility. In fact, the crisis in Libya might even turn out to be a boon for Penn West. Nearly 53% of the company's production happens to be light/medium oil -- the very type available in Libyan oil fields and the same type that is causing all the volatility in global oil prices.

The turnaround
The company has remarkably turned a $147 million net loss in 2009 into a $231 million net profit in 2010, thanks to its diversified portfolio. This might translate into a net margin of only 9%, but it definitely shows how fast the company could bring about a turnaround. This is actually pretty impressive given that small-cap E&P companies are still reeling from losses generated during the financial crisis.

Just to put things into perspective, ATP Oil & Gas (Nasdaq: ATPG) posted a trailing-12-month net loss of $171 million as of Sept. 30, 2010, over and above the net loss of $49 million in 2009. On the other hand, companies venturing into the Canadian shale play and oil sands like Nexen (NYSE: NXY) are accelerating after a slowdown in 2009.

At Penn West, long-term debt has progressively come down to $2.8 billion from $4.2 billion in 2010. EBITDA/interest expense -- a metric that shows how comfortably the company is able to service its debt -- has seen a year-over-year improvement to 7.7 times compared to 6.7 times in 2009. This is nowhere near the 47.9 times in 2005, but the trend is inspiring, and it leads me to believe that this company is well-positioned to reap the gains over the long term

The Foolish bottom line
In spite of posting losses in 2009, Penn West has increased its investments, with capital expenditures rising 153% 2010. This makes sense only if the company has long-term goals in focus, and I think it does.

The yield for this stock stands at 4.1%, which undoubtedly is appetizing. Overall, this looks like a safe stock with investors standing to gain in the long run.